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The Poisson Method of Poverty Measurement Using Non-monetary Indicators: A Replication Study Based on Australian Data

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  • Kitae Yoo

    (University of Sydney)

Abstract

This study revisits the Poisson-based framework to derive optimal thresholds of relative deprivation in the Australian context. Poverty measurement in developed countries mainly relies upon household income to capture those who are poor from the rest of the population. However, there is a growing recognition that the non-monetary indicators of relative deprivation can significantly improve the identification of those living in poverty. Relative deprivation is typically operationalised as not being able to afford and obtain a list of items that are considered essential in a given society. The key advantage of using such non-monetary indicators relates to its ability to directly capture the manifestations of poverty and assess people’s living standards. Yet, one salient issue is the selection of a meaningful threshold from which the deprived and the non-deprived can be separated. Following on Babones et al. (Babones et al. Social Indicators Research 126:711–726, 2016), this study replicates the Poisson method to specify an appropriate threshold value (k)—the number of missing essential items—that defines a person or household as deprived in Australia. Based on data from the 2018 Household, Income and Labour Dynamics in Australia (HILDA) survey, thresholds of k ≥ 4 for non-possession (merely lacking items), k ≥ 3 for derived deprivation (lacking and not being able to afford items), and k ≥ 3 for inferred deprivation (lacking and regarding items as essential) are suggested, respectively.

Suggested Citation

  • Kitae Yoo, 2023. "The Poisson Method of Poverty Measurement Using Non-monetary Indicators: A Replication Study Based on Australian Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 166(1), pages 219-238, February.
    • Handle: RePEc:spr:soinre:v:166:y:2023:i:1:d:10.1007_s11205-023-03067-z
    DOI: 10.1007/s11205-023-03067-z
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    References listed on IDEAS

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    1. Peter Saunders & Yuvisthi Naidoo, 2018. "Mapping the Australian Poverty Profile: A Multidimensional Deprivation Approach," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(3), pages 336-350, September.
    2. Sen, Amartya, 2001. "Development as Freedom," OUP Catalogue, Oxford University Press, number 9780192893307.
    3. Alkire, Sabina & Foster, James, 2011. "Counting and multidimensional poverty measurement," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 476-487, August.
    4. Sen, Amartya, 1983. "Poverty and Famines: An Essay on Entitlement and Deprivation," OUP Catalogue, Oxford University Press, number 9780198284635.
    5. Salvatore Babones & Jehane Simona Moussa & Christian Suter, 2016. "A Poisson-Based Framework for Setting Poverty Thresholds Using Indicator Lists," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 126(2), pages 711-726, March.
    6. Sabina Alkire & James Foster, 2011. "Understandings and misunderstandings of multidimensional poverty measurement," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(2), pages 289-314, June.
    7. Atkinson, Tony & Cantillon, Bea & Marlier, Eric & Nolan, Brian, 2002. "Social Indicators: The EU and Social Inclusion," OUP Catalogue, Oxford University Press, number 9780199253494.
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    9. Nolan, Brian & Whelan, Christopher T., 2011. "Poverty and Deprivation in Europe," OUP Catalogue, Oxford University Press, number 9780199588435.
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